In the latest upheaval at the always tumultuous New York Daily News, the paper’s Sunday editor, Frank Lalli is out after less than three months on the job.

“I spent a lot of years on magazines and some years at newspapers, and I just found magazines were much more rewarding for me,” said Lalli.

Rumors had been swirling this week that more cutbacks were on the way. “It’s a bit of a snake pit here,” said one insider. “Maybe rather than whack five more reporters, they just decided to go after Lalli.”

An insider estimated that Lalli was earning upwards of $250,000 annually.

Other sources speculated that Lalli may have run afoul of Daily News owner Mort Zuckerman for a big Sunday package story on May 27, “Rudy’s Crumbling World,” which angered Giuliani.

The lengthy piece said Rudy was distracted and adrift.

The mayor was not contacted in advance of the story running, and after it ran, he went ballistic. “The paper took some heat for the story, but at least three editors read it,” said one insider.

Others thought that mattered very little in the final analysis. “I don’t think that had anything to do with it,” said one staffer. “He just turned out to be a bad fit – he knew, and they knew it.”

Lalli had been the editor of George, the political magazine founded by John F. Kennedy Jr., which closed this year.

For awhile, after his arrival at the News in mid-March, he was rumored as a potential replacement for Steven Smith as editor of U.S. News & World Report – also owned by Zuckerman. Smith was ousted, and the job went to Brian Duffy.

Lalli is also said to have clashed with Deputy Editor Michael Goodwin.

A News spokesman said, “We wish Frank the best of luck with his new magazine venture.” He declined further comment.